The consultation, which runs until 2 February 2017, is looking for technical advice on developing a single, harmonised set of requirements that are reasonably simple, proportionate, and more relevant to the nature of investment business.
The EBA is proposing that the ongoing capital requirements should be calculated based on capital factors (K-factors) that are attributed to one of two broad types of risks; namely risk to customers and risk to market integrity and liquidity.
Therefore, firms that pose greater risk to customers and markets should have higher capital requirements than those that pose less risk.
Firms that pose similar risk to customers and markets but with more own risk should hold more capital than those with less own risk.
The discussion paper covers the most important aspects related to the new prudential requirements for investment firms, including three possible alternatives to set minimum liquidity requirements.
All three alternatives aim at addressing the liquidity profile of investment firms in a more appropriate way than the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR).